October 6, 2016

The Honorable Richard Cordray, Director Consumer Financial Protection Bureau 1700 G Street, NW Washington, D.C. 20552

Docket No. CFPB 2016-0025

Dear Director Cordray:

As members of the Legislature, we have seen firsthand the devastating impact that predatory payday lending has on struggling families, on small businesses and on Florida’s economy overall. For a family struggling to make ends meet the outrageous interest rates on payday loans, averaging a staggering 278% APR in Florida, make these loans virtually impossible to repay and still meet the family’s basic needs.

When a family’s monthly income is low it is financially dangerous to incur a $500 payday loan debt, plus the fees and costs of $55, in a balloon payment within weeks of taking out the loan. This lump sum payment leaves a huge hole in the family’s budget. Further, the direct access to bank accounts that most payday lenders demand allows the payday lender to reach directly into the family’s bank account for payment. With this huge hole in their budget, families are left with little choice but to re-borrow again and again, incurring more fees and costs, and ultimately going deeper into a cycle of debt and desperation. Data from Florida Office of Financial Regulation illustrates the

1 problem. It shows that in 2015 almost 60% of payday loans were to borrowers trapped in a staggering 12 or more loans per year, clearly a cycle of debt.

Florida is a prime example of how regulatory intention can be thwarted by predatory lenders taking advantage of loopholes. The 24-hour cooling-off period between loans found in Florida law, created to discourage repeat loans and break the cycle of debt, has proven too short to protect consumers. This, in addition to the lack of a state cap on interest rates, allows the lenders to trap many in an endless cycle of debt.

The CFPB’s proposed rule is an important step forward for millions of Americans and for the people of Florida struggling to escape the debt trap, but it must be strengthened to be effective. It is critically important that the CFPB close loopholes in the proposed rules. A determination of the ability to repay the loan is a protection for families that should be required in all loans made. The Bureau should strengthen this part of the rule, closing the loophole that would allow lenders exemptions from this requirement.

As a nation, we must put people over profits and protect vulnerable families from deception, coercion and abuse by poor-quality lending products. We urge the CFPB to enact the strong rule our families deserve.

Sincerely,

The Honorable Mark Pafford Florida House of Representatives District 86

The Honorable Dwight Bullard The District 39

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The Honorable Hazel P. Rogers Florida House of Representatives District 95

The Honorable Florida House of Representatives District 99

The Honorable Cynthia A. Stafford Florida House of Representatives District 109

The Honorable Lori Berman Florida House of Representatives

3 District 90

The Honorable Gwendolyn Clarke-Reed Florida House of Representatives District 92

The Honorable Dwight Dudley Florida House of Representatives District 68

The Honorable The Florida Senate District 12

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